US trade war: Mexico, and NAFTA

During his election campaign, Donald Trump promised repeatedly to re-set NAFTA, the North American Free Trade Agreement. The Trump Administration blames NAFTA for the loss of over 700,000 American jobs, mostly manufacturing jobs. By some estimates, that number could be a lot higher.

Any NAFTA party can pull out of the agreement within six-months’. However, Trump's rhetoric is unlikely to translate into action. For one thing, the president seems unable to receive the congressional approval he would need to act on a major trade agreement.

Many experts believe Trump's NAFTA tactic is just a game of bluff in order to gain leverage in the ongoing talks with Canada and Mexico in order to get his Trump also blames the treaty for the $60 billion annual US trade deficit with its southern neighbor Mexico. But is that so? By keeping his promise about NAFTA, perhaps, Donald Trump is more concerned about his re-election results in key constituencies where NAFTA has had negative impacts. In fact, Trump has only one audience, and that’s the electorate.

Since the inception of NAFTA, Mexican workers began to face financial hardships as wages and benefits began to fall behind worker productivity. Currently, there are about 20 million people in the country with food poverty, i.e. without enough money to buy daily food. In fact, after NAFTA, workers’ living standards all across North America began to undergo drastic changes.

It is common knowledge that “expanding trade" was not the primary intention of NAFTA, at least from the Americans' point of view. Besides opening up the Mexican market, with NAFTA, US companies could have more control over unions.

In hindsight, NAFTA’s central purpose resulted in freeing American corporations from US laws protecting workers. But the decline in labor protection had already begun before NAFTA as a result of a systematic change in the US labor structure.

NAFTA strengthened the ability of US employers to force workers to accept lower wages and benefits. The result has been years of stagnant wages and the upward redistribution of income, wealth and political power.

NAFTA was in fact the template for rules of the emerging global economy, in which the benefits would flow to capital and the costs to labor.

In addition, the destructive effect of NAFTA on the Mexican agricultural and small business sectors has dislocated millions of Mexican workers and their families. It has been a major cause in the dramatic increase in undocumented workers flowing into the US labor market.